Chrysler scrutinizes media mix, ad spending

Chrysler Group is reviewing its ad budget, media mix and agency relationships as part of a broad effort to cut costs in light of its $1 billion-plus loss in the second quarter.

"Everything is under review in the current situation," said Joe Eberhardt, the automaker's exec VP-sales, service and marketing. In one of his first interviews since taking the post in June, he said he doesn't expect the DaimlerChrysler unit to change its "overall agencies," but it is studying all relationships, its combination of traditional and non-traditional media and the effectiveness of each. No specific time frame is set for a decision.

Omnicom Group's BBDO, Troy, Mich., has handled all Chrysler brands since a consolidation review in fall 2000 under earlier client management. Agency sibling Arnell Group, New York, has played a major supporting role to BBDO under the new management. Omnicom's PHD, Detroit, does media planning and buying.

Chrysler Group spent $1.17 billion in measured media last year, according to TNS Media Intelligence/CMR. Its Dodge, Jeep and Chrysler car and truck sales slid to 1.105 million units in the first half of 2003 vs. 1.162 million in the same period a year ago.

The ad budget is normally one of the first items examined in cost-cutting moves, said Mr. Eberhardt, who had most recently been president-CEO of DaimlerChrysler U.K. In the short-term, Chrysler "may shift out of brand-building-mode [ads] into more product advertising and sales-message-type advertising without hurting the longer-term brand-building messages," he said. The marketer will also study whether incentives are more effective than its current $100-million ad blitz for a summer-long sales event.

extending lineup

While he believes Jeep is the automaker's strongest brand because of its authenticity as an off-road sport-utility specialist, he said Chrysler is struggling a bit with how to extend the lineup. From an advertising standpoint, Dodge is performing best in awareness and recall, especially its Hemi-related ads. "Has it got a Hemi in it," a line used in several TV spots, "almost has the potential for a cult tagline," he said.

The Chrysler brand is the problem child, as it tries to move upmarket to premium.

Mr. Eberhardt said the nameplate's deal with Celine Dion has improved brand awareness, but that there's no evidence she's either helping or hindering vehicle sales. "I don't think we'll see too much of her personally in advertising now." But Chrysler will honor its three-year contract with her, including its partnership of her on-going Las Vegas show and use of her music in ads. That's not a change in strategy, he maintained. Plans were always for the singer only to appear in the first round of TV commercials with the second wave using her music.

celine `supports shift'

That was the case with Chrysler's recent launch of the Pacifica. Ms. Dion was prominent in the launch spots and isn't seen in the current second wave. Pacifica's early sales were disappointing and Chrysler dealers complained the ads focused too much on the songbird and not on Pacifica (AA, June 2).

Mr. Eberhardt doesn't see Ms. Dion appearing in product advertising, he said. "Her role is to support the shift of the Chrysler brand" and she has helped lay that groundwork already, he said. The comment comes only a week after Tom Marinelli, exec VP-marketing at Chrysler, said Ms. Dion "will play a key role" in the launch of the company's PT Convertible and Chrsyler 300 (AA, July 14).

Mr. Eberhardt admits he's not a fan of "personality associations" for advertisers due to consumers' varied perceptions. He cited Michael Jordan for Nike and George Foreman for his grill as the only two good examples.

His predecessor, Jim Schroer, inked the $14 million deal with Ms. Dion. The automaker said Mr. Schroer resigned in late May "to pursue other interests in other areas of the marketing profession."